Low-Income Communities Bonus Credit Program for Energy Investment Credit

Summary

This practice note focuses on the requirements and application process for the low-income communities bonus credit program for the energy investment credit. The bonus credit provides a 10 or 20 percentage point increase to the investment tax credit for qualified solar and wind energy facilities with a maximum net output of less than five megawatts (AC). The credit, which was instituted under the Inflation Reduction Act of 2022 (Pub. L. No. 117-169), provides for an increased energy investment credit for applicants investing in qualifying solar or wind-powered electricity generating facilities. The increased credit applies to the year in which the facility is placed in service. In accord with the statutory provisions, applicants may apply for an allocation of environmental justice solar and wind capacity limitation that will increase the amount of their energy investment credit for the year in which the facility is placed in service.